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Removal of Managing Director of Pvt. Ltd. Company

Sumit (Finance Professional) (60 Points)

05 March 2009

Dear Friends,

I have one query on Company Law. I would be glad if you give your professional views on this:

My Client Private Limited Company has Mr. X holding position of Managing Director. Since his acts are detrimental to the interest of the company, the Board wanted to remove him from the company. Could you please tell me the provisions applicable & detailed procedure for the same.

Thanks in advace. Your early reply is highyl appreciated.

Best Regards,

Adv. Sumit

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6 Replies

HARDIK (COMPANY SECRETARY NCFM (Corporate Governance )) (664 Points)
Replied 06 March 2009

since ur client company is pvt ltd then provision related to MD not applicable unless it is a subsidiary of public company. For removing a director follow the procedure u/s 284.

Hardik

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LAXMIKANT JAIPURKAR (Practicing Company Secretary/Tax Consultant) (403 Points)
Replied 10 March 2009

U/s 284 the procedure is as below :

1. Members have to object on the director and to call the AGM/EGM for the removal of the said director.

2. Company have to send the copy of objection letter of members to the director.

3. The director (who required to be removed) may submit his representation in the EGM.

4. The EGM to be called and director may be removed with majority.

5. Form-32 to be filed alongwith the resolution passed in EGM.

6. Copy of form-32 alongwith the EGM resolution result to be intimated to the director removed.

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SOURABH GUPTA (CS) (100 Points)
Replied 13 March 2009

u can remove him under section 283 (1) (g). It will be beneficial for u in that particular case. Record ur proceedings propely in Board Minutes for that purpose.

Divya (Advocate) (150 Points)
Replied 25 May 2009

A Director can be removed from his office by passing an ordinary resolution provided that the specification as laid down in Section 284 is followed to be as follows:(as specific to a private ltd company)

1) Special notice has to be issued on the members for a resolution requiring the removal of a Director or to appoint another Director in his place at the same meeting in which he is to be removed.

2) A copy of the special notice as above should also be forwarded to the Director intended to be removed.

3) Without prejudice to the right of a Director to be heard at the meeting on receipt of such special notice the Director may make a representation in writing of reasonable length in his defense to the Company on receipt of the special notice which in case if its not too delayed, a reference in the special notice that a representation in the regard is received by the Director has to be made and a copy of the same is to be forwarded to the members and in case the representation has not been so forwarded then the Director may cause the representation to be read out at the meeting.

4) The vacancy of the Director if he has been appointed at a general meeting may be filled at the same meeting by appointing another Director in his place by the members and a reference of such an intended appointment has to be made in the special notice.

It has to be noted here that a Director removed under the meeting cannot be reappointed by the Board of Directors.

5) The power under this Section shall be in addition to other powers under the Companies Act, 1956 for the removal of a Director.

And the removal of the Director shall not disentitle him of any compensation or damages payable to him for the wrongful termination of his office as the Director or for the termination of any other employment/office as a result of his termination as the Director.

Bhawna (Secretarial Assistant) (22 Points)
Replied 19 December 2009

Dear Friends,

I have one query on Company Law and need professional advice:

My Client is Public Limited Company & listed at stock exchange. It has Mr. X holding position of Managing Director. Since his acts are detrimental to the interest of the company, the Board wanted to remove him from the MD position &/or cease his powers. Could you please tell me the provisions applicable & detailed procedure for the same.

Your early reply is highly appreciated.

Regards,

Bhawna

Company Secretary

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CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 23 December 2009

Is the procedure for removal of an Additional Director before the date of AGM in a private limited company same as for MD as stated above u/s-284? If different, please let me know the procedure to be followed.

Thanks in advance.